How to book a profit

In the middle of a downturn, chances are that a book will behave a bit like a car. The smaller its price tag, the better is its chance of leaving the checkout gate. A brief tour through the aisles of any book shop in Colaba or Janpath shows the same picture—the disappearance of the high piles of egregiously priced coffee tables and the brisk sale of pulp fiction, pulp essay and even pulp philosophy.

The magic lies in the pricing. It must be limited to just a few hundred-rupee notes that the thumb and the index can unhesitatingly squeeze out of the wallet's sparse interior. According to Chiki Sarkar, Random House's Editor-in-Chief , the usual practice is to price a book by its size and the number of pages it has. "I have found that it's best to price a book below Rs 500, and that once you price a book a bit more, it generally moves slowly," says Sarkar.

Given the price sensitivity of a market like India, the book industry in the country is dictated by authors, publishers, retailers and the ubiquitous roadside bookseller, who ensures the book is sold at throwaway prices, while miraculously making an enviable margin.

Owing to the slowdown, the pressure on the industry is more palpable , though that is not the truth all the time. "Publishing is traditionally robust through periods of recession. Reading is seen by many as great value," thinks Mike Bryan, CEO and President of Penguin India . That has been a little different this time since retail, a key component of the publishing nexus, has also not had it easy.

Bryan concedes that organised retail has faced the heat partly because of the credit squeeze on the parent companies of many retail chains, and partly because of reduced footfalls at new malls. Perhaps, another major reason for a drop in sale of high-priced books is due to consumers generally avoiding credit cards. According to credit card industry sources, there has been a 15% reduction in the volume of purchases against credit cards in 2008-09 . This has adversely impacted the buying of books against cards, as buyers start relying on cash, which again, the bookbuying-types usually don't carry in large volumes.

The other side to the story

Here's an interesting version from the authors as well. Pune-based Gouri Dange, who wrote 3, Zakia Mansion, says the money from writing is not huge. "There are no big advances and I actually make more through my columns," she exclaims.

Besides, how does a budding author clinch that big deal? Agents here are not said to be as clued in as they are in the West. "It takes about 8-10 months to clinch a deal after a book is written. There is also a time lag involved in the book hitting the stands and writers should be prepared for that," says Dange. Her book, which sold for Rs 200, brought in just 10% as advance. With a print run of 2,000 copies, Rs 40,000 is all that came her way.

The truth is the business is driven by high costs and what makes it more complex is that the end-consumer in this business is hugely price-sensitive . In the middle of this, how much to charge for a book is left to the publisher. Now that is a tough decision. And the slowdown has ensured the story takes a different turn. A candid Akash Shah, Publisher, Jaico Publishing, says the last six months have been rather difficult with credit cycles being deferred and book shops going slow on orders.

"About 65% of our costs are on paper for which there is no subsidy from the government. In India, if pricing remains a key issue, margins too are under pressure," he adds, with a hint of worry. For a player like Jaico, which has published best-selling titles like The Monk Who Sold His Ferrari, there is a fairly steady pipeline in the form of academic books. Smaller publishers are certainly less fortunate.

Looking for an opportunity in a slowdown

Spending on books comes directly from the consumer's wallet and for an emerging economy like India, that outgo is still discretionary. Besides , at least 15% of the market is grey. How a new book like Paths of Glory finds its way to the pavements of Flora Fountain or Janpath is a mystery that confounds the publishers. "In the last two years, the slowdown in book volumes is to the extent of 50%.

Globally, large establishments like Barnes & Noble too have shut down a lot of their shops," rues Jimmy Shroff who runs Book Zone and Sterling Book House, two well-known stores in Mumbai. He is forthcoming on margins and says that it ranges from about 25-40 % from the publisher to the distributor (this varies depending on the size of the publisher), and settles at around 20-35 % from the distributor to the retailer.